Why Giving Away Free Stuff Actually Helps Your Business

Perhaps you’ve noticed the following online trend: Many websites offer a lot of good stuff completely free to their readers. To begin with, there’s I’ve Tried That and its 7-Day Intro to Success email course. Pat Flynn of Smart Passive Income currently offers an ebook on how to publish and market your own ebook. And to poor graduate students trying to make some extra money on the side, UW-Madison’s own Ryan Raver offers a free second income ebook.

How can these online entrepreneurs afford to give away so much of their stuff for free, and especially when many of their readers would gladly pay for this material?

A tale of two social experiments

To answer this question, let me tell you a little story about some behavioral research scientists who had a little (too much) time on their hands and decided to run some human experiments (incidentally, human experimentation can be quite lucrative). These researchers offered their subjects two types of chocolate for purchase: Hershey’s Kisses and Lindt truffles. While both items are made of chocolate and are certainly a treat, Lindt truffles are hands-down a better quality chocolate and far more expensive than Kisses.

The Kisses and truffles were priced at 1 cent and 15 cents, respectively. Normally, Lindt truffles cost about 30 cents per piece, so the 15 cent price tag of these truffles was a good value for the money. Naturally, about 75% of the subjects chose to buy the truffles over the Kisses.

Then, these researchers altered the pricing structure of the chocolates by a single penny; the Hershey’s Kisses were reduced from 1 cent to free and the Lindt truffles from 15 cents to 14 cents per piece. Again, both chocolates were offered to the test subjects. What happened?

In this situation, 69% of the subjects chose the free Kiss over the value-priced truffle.

The results and analysis of this intriguing human experiment are discussed by one of the researchers, Dan Ariely, in his book “Predictably Irrational”. Suffice it to say, people go nuts when something free is offered, even if that free item isn’t that great.

However, people will still go nuts over a free item even if that entails buying more. When Amazon ran a global “Buy a Second Book, Get Free Shipping” promotion, every country jumped on the offer…every country except France, that is. When Amazon marketing execs examined why France wasn’t taking the bait, they found out that the promotion had been slightly altered in that country: Instead of being offered free shipping, the French were being offered shipping for only 5 francs (our equivalent of 20 cents).

It was still a fantastic deal…but it wasn’t free.

Once Amazon execs restored the free shipping promotion to France, the French also jumped on the bandwagon and started buying books galore.

What the emerging field of neuromarketing is showing us is the following: Consumer psychology is messed up. Furthermore, it’s not just messed up- it’s predictably messed up.

This means that you can use the concept of free to your advantage.

People like love go krazy for free stuff

It’s no secret that people will spend an inordinate amount of time- a resource that, like money, is limited- to obtain something for free. Just look at The Krazy Coupon Lady, a super-couponing website that often advertises small items that can be obtained for free if the correct alignment of coupons is used. These coupons take time and effort to acquire. Some super-couponers spend 20+ hours or more per week obtaining and matching coupons to store sales. Such time would be better spent at a part-time job. However, no “sane” super-couponer will listen to you if you try to point out that fact.

Because people are innately attracted to free stuff, you can offer free ebooks, software, courses, etc. as a way to build traffic to and interest in your business. However, you might be wondering how these interested parties won’t just leave your business page as soon as they collect their freebies. After all, once the free item has been obtained, what’s there to keep your audience interested and loyal?

Give away the store- for a price

Savvy Internet marketers know that there’s no such thing as free and even items advertised as free come with a price. In many cases, that price is the consumer’s name and email. Thus, the actual price of “free” stuff is usually information.

Once a potential customer’s information is known, he or she can be placed on an email newsletter and contacted directly with promotional materials, programs and offers. The email list is where most business is done and where the real sales are made. In fact, there’s even a saying: “The money’s in the list”.

Additionally, an email list is forever. If you lost your business website or blog or were otherwise forced to close up shop, you could still take your email list with you and use it.

Give away the store- but make sure your customers return

There are several ways you can help ensure that your audience takes your free items, uses these items, and then comes back for more.

1. Give away the highest quality. The first way to ensure audience return is by giving away only your highest quality items for free. Yes, this tactic may seem odd, but hear me out: If your audience downloads an ebook or other item from you that is filled with blatantly obvious or general information, it will assume that you have nothing of value to offer. That audience will never return to you.

However, let’s say your audience downloads something from you that is just packed with useful and even unexpected information. Not only will your audience be impressed with what it received for free, it will automatically assume that what you are selling must be even better. After all, if even your most useful advice is free, imagine how good your paid stuff must be. In this case, your freebie has served as a great promotional item by establishing your credibility and expertise in the field. But wait- there’s more…

2. Go viral. A quality freebie is invariably shared with others. Your audience members may find your free content so useful that they end up passing it on to other people that they know. These people are also wowed by your freebie, visit your website and even sign up for your email newsletter.

You can help initiate and perpetuate a viral share trend by announcing your free content on social media platforms like Twitter or Facebook, or making social media syndication a requirement of content download.

3. Provide payback opportunities. If you consistently impress people with your high quality freebies, many will look for ways to pay you back for your gesture(s) of goodwill. Don’t pass up on these opportunities! Create areas in your free content where readers/users can actually buy a product that relates to your freebie item and helps them become more adept at whatever they’re learning or doing. Likewise, be sure to mention that you have more in-depth versions of the same content, software, etc….for a price. Don’t be shy about tooting your own horn and discussing all the benefits of the paid-for item. If possible, give your audience the best sample of the touted item so they understand why you’re charging for it.

The Bottom Line

The concept of free, especially in the hot and emerging field of neuromarketing, works best with consumers because it is an emotional trigger. Roger Dooley, the primary blogger at Neuromarketing, aptly explains how free works to not only make us buy, but buy even more than we originally intended. Thus, if you’re worried about putting out high quality, free stuff on your website or blog, don’t be. By offering “something for nothing”, you’ll not only be establishing a sense of goodwill and credibility with your audience, but you’ll also be helping your business grow and generate revenue.